FTSE 250: Greggs raises the price of its sausage roll again despite strong sales

Greggs (GRG.L) has increased prices again despite a total sales increase, with its sausage roll going from £1.05 at the start of the year to £1.15 this week.

The bakery, known for its sausage rolls, steak bakes, vegan snacks and sweet treats, grew total sales by 14.6% in the last 13 weeks.

Price on other products rose 5 to 10 pence as its CEO said the bakery is battling rising costs.

"We have put a small number of rises across products as of yesterday, we've worked hard to mitigate that," chief executive Roisin Currie told Reuters.

Currie said she hoped it would be the final round of price increases this year but could not guarantee it.

Greggs said sales slowed during August as people ditched the staycations that had been fuelled by the pandemic, but that momentum returned in September.

Read more: Greggs warns prices could rise for the second time this year

Watch: Greggs refuses to rule out more price rises as cost pressures become 'more significant'

Greggs also noted that its sales growth dipped by about 1% as a result of closing its shops for the Queen’s funeral on September 19.

Sales were up 14.6% to 13 weeks to 1 October, which was below the 27.1% growth reported in the first half of the year.

However, with no change in cost inflation, the group kept its full-year guidance unchanged, which is in line with last year’s pre-tax profits of £145.6m.

“Greggs continues to trade well in an environment where cost pressures are significant, and our outstanding value-for-money positioning is ever-more important to consumers,” the firm said in a statement.

Some 90 net new shops opened in the year to date, with the brand anticipating around 150 openings in total this year.

Greggs’ share price was buoyed by 9% in early trading on Tuesday morning.

"Greggs is holding its own in an extremely challenging economic environment, with little sign so far of consumers cutting back on sausage rolls and pasties," Charlie Huggins, head of equities at Wealth Club, said.

Read more: Greggs to launch new fashion range at Primark

"Fortunately for Greggs, while costs have grown, so too have revenues. Gregg’s brand reaches more people today than before the pandemic, and is in fine fettle. For that, the group can thank Piers Morgan’s hatred of vegan sausage rolls, but also excellent operational execution. Greggs has transformed its supply chain while growing its product range and store estate".

Julie Palmer, partner at business consultancy Begbies Traynor, said: “The pastry powerhouse has delivered yet again this morning. In an economy where customers are looking to cut costs at every opportunity, Greggs has a significant advantage over its pricier competitors like Pret and today’s trading update shows no shakeup to the first half’s momentum.